Amazing Calculator for New CSA Formula

The CSA Taskforce released a proposal inter alia for a new CSA Formula in June 2005, and although they have paid big bucks to NATSEM to do some global modelling [ie for gummt clawback purposes only] there is no facility available other than this site to find out what the new formula means for YOU, the payer or the payee [or perhaps to you the taxpayer].

But wait, there's more!! - This amazing calculator is a three way system that provides not only both the NEW - 2005 and OLD -1989 formula result for your chosen date, but also a comparison to the "PROPER" METHOD as used by a court under the CSAAct Part 7 if the formula in Part 5 proves to be a dud [in the special circumstances of the case]. Incidentally the Part 6A COAT is meant to use the court method but don't, so we will not mention the COAT again. Anyway the Professor said:

"A major part of the work of the Taskforce required the analysis of the operation of the existing Child Support Scheme and proposed alternatives and their interaction with the tax and income support systems. The National Centre for Social and Economic Modelling (NATSEM) at the University of Canberra was commissioned to develop a detailed model for this purpose. This was a complex task, but this microsimulation model and the extension of NATSEMís population model (STINMOD) provide invaluable tools for future policy analysis and development. They enable the modelling of alternative policies to show outcomes for both individual families and the general population."

But there's even more folks, and at no extra price!! This amazing software solution which has been 10 years in gestation also provides a total projection figure for all three methods above, to the date the youngest kiddie reaches 18. Ask the CSA or NATSEM 'puters to do that and the taxpayer would get a quote for many millions, plus about 5 years delay - but you have it right here folks, at your very fingertips via high level computer technology, sadly lost in the new world of I.T. Professionals, so at the end of the day you too can get closure on your CSA questions you were afraid to ask. This projection is important for several reasons which will become clear as you read on. So to whet your appetite here is an example based on Tom and Meng, the cameo example on page 241 of the Taskforce Report.

As you can see our amazing calculator agrees with the good Professor's $6,344 pa ie $122.00 pw for Tom to pay to Meng [we assume via the CSA as (expensive) middle man]. BUT we do FAR FAR more "in the interests of the 3 little kiddies" in this example. Firstly we compare to the 1989 formula and find it is but 52% - ie a 48% saving. However the projected figures show a lesser saving of 40% [of course because the new formula increases for kiddies over 13 - and in the total green figure of $78,758 you can see (upper graph) how the bars change from year to year as each of the kiddies get to 13]. You will also note how the red bars remain constant for first 8 years. We will talk further of the blue bars herebelow.

But before we progress we are curious [are you curious?] what happens to Tom if he has a second family, so we marry him off this time to Peng and they have a kiddie called Ping - here is the result:

So for his case the old formula gave a greater incentive to have a second family [so politicians with unfunded superannuation will have a source of tax funds in 2025 when they retire]. But the new formula also looks at a new family for Meng, so we marry her to Seng and they have a kiddie called Sing - here is the result:

So there is an extra 3 grand in there for Meng, ie an inducement for all sides to "go ye forth and propagate with attitude" to pay for that unfunded super.

So the scenarios you can investigate with this amazing calculator are endless, but we have not as yet introduced the other portals of information - so here is the info sheet or page 1 for Tom and Meng before they had new kids:

So as you can see, the user simply supplies info on incomes, birthdates and contact in days per fn and holiday weeks per year - and the amazing program translates that to the correct format for number crunching.

The final sheet displays the content behind the blue bars in the above graphs, ie the court method which is essentially the 2 step method from the 1986 Mee & Ferguson case [or 3 step if kid is Boris Becker - funny little joke in there from the full court!]. The method is tabulate the cost of the kids to each parent [based on the contact percent] and apportion it to the parents in ratio of their incomes. Essentially that is what the 1989 formula tried to do but firstly there were no facts on cost of children [Lovering and Lee are NOT such surveys, as the 1994 JSC determined] and secondly the use of a percentage made a mockery of the exercise. The 2005 formula method comes closer AND we now have the BSU Report on cost of children, but there is still the arbitrary nature of a percentage formula [ie progressive and not absolute].

So the blue bars are pure mathematics [ie no politics or racist "disregarded" income etc] based on the absolute figures of the BSU [Report #74] so they can be considered the benchmark result at s 117(4) or "just and equitable" which the court is required to establish if and only if the combatants pass the threshold test at s 117(2). As such there is no attempt made to involve new kiddies like Sing and Ping, nor to say what should happen as with the examples above where clearly the blue result is more than the parents can handle, so judges' discretion prevails. It is never wise to tell a judge how he/she might wield discretion - so we don't. But the good news from case law is they will first determine just how much of the blue bars dad can pay [not based on "capacity to earn" as per COAT] and divide equally between ALL the kiddies.

However it is worth explaining two things, firstly that the "exempted" income is not an arbitrary 13 grand or 16 grand as per the formulas but the actual "cost of dad/mum" from the very same BSU [currently about 20 grand pa] and secondly the apportioning of child support based on incomes is based on AFTER TAX incomes. Finally automatic CPI increase is built into this amazing software [by an amazing URL to Peter Costello's lips], thus negating any more need for the very expensive AIFS [updates Lee and Lovering] and Henman [updates BSU].

So here is a sample page 3 using Tom and Meng

The page should be self explanatory, but we have for several years included page 3a to explain the particulars. Here is page 3a

So where might the blue figure be useful? Well maybe that situation will not be as prominent with the new formula, but the normal situation is [to use that lovely judicial expression of McHugh J] "the other end of the pineapple", ie where a progressive formula based on percentages produces way too much child support for "her indoors" - referred to as the "sofa loafer" by the blokes [and it now seems by the gummt itself which wants SLs back in the workforce].

Here is an example from our databases of Peter and Elizabeth [names changed of course]

There are 2 kiddies, E and W here aged 6 and 10 and dad works hard in outback WA to convert Oz back from being a Banana Republic, while mum is a SL [but with W now 6 Peter Costello will be asking her to quit the sofa and get a job, or so we are told]. Of course except for being "required" to return to work she would have no need because the difference between the red and blue bars for 2005 gives her the equivalent of a $32,000 pa income from a job, disguised as spouse maintenance in her "child support". As seen the new formula almost halves that spouse maintenance [and provides a lot more incentive for her to get a job].

But what the hey man! Let's give her a job, and with over $2 billion pa for the women's push by Howard/Goward it is dead easy for Elizabeth to move to Townsville [paid by taxpayer] and get a job at JCU doing research on what women stock up on when there is a cyclone warning [don't laugh folks, that actual project was announced recently]. Anyway she is on $38,000 pa

The red bar of course is unchanged because the reformed SL is still below the [Belinda Neil dissenting at JSC] disregarded income for the old formula, but she has lost over 3 grand pa under the new formula. But why has the blue line gone up some 20 grand over the full period? Well that's because mum is now MBA and not LC standard, ie the terms of reference from the DSS to UNSW for the BSU were that if mum is on the sofa she can still yell at the kids so does not need child minding. With her new classification she gets full recognition for child minding [albeit that there is a creche at JCU free of charge - but we'll "disregard" that ill gotten fudge!].

What is therefore fantastic to see is that the new formula now almost equals the [true] blue figures, thus providing a result almost safe from departure application under s 117. We therefore get back to the aim of the CSScheme in 1989, ie an administrative formula that, as near as possible, provides for the proper cost of the children - well, for this case at least.

But what if Peter wanted to explore paying only the blue amount [remember this is the identical "fixed and proper" amount that was way too big for Tom and Meng]. Well the answer is that the CSAAct provides a path to do that, but that is beyond the scope of this introductory explanation.

Here are 2 more scenarios, as discussed at DOTA on 6 November 2006